The position of CEO Julie Smolyansky on top of Lifeway Foods, Inc. is at stake again after her mother and brother kick-started a process to oust the firm’s current leadership.
Edward and Ludmila Smolyansky – who collectively own 23.2% of the company’s shares – have filed a definitive consent statement with the US Securities and Exchange Commission (SEC) seeking shareholder approval on four proposals, including to removal of the company’s board of directors.
They are seeking approval on the following:
- Bylaws restoration: To repeal any bylaw amendments adopted after March 24, 2023.
- Board removal: To remove Julie Smolyansky, Juan Carlos, Dalto, Jody Levy, Dorri McWhorter, Perfecto Sanchez, Jason Scher, Pol Sikar and any other director appointed by the board on or after June 15, 2024.
- Director Election: To elect Ludmila Smolyansky, Edward Smolyansky, Richard Beleutz, Cindy Curry, Michael Leydervuder, George Sent and Robert Whalen to serve as directors until the company’s next annual meeting.
- Anti-Nepotism: To amend Lifeway’s by-laws to prohibit it from employing or engaging any immediate family member of its president or CEO.
The duo made a similar filing last year, with Ludmila then claiming the company ‘started by my husband and me in 1986 needs a fresh direction that honors its legacy while securing its future’.
‘The most direct and effective way’
Consent solicitations are not very common in the US corporate world and many companies have provisions to restrict their use in order to prevent takeovers from so-called activist shareholders.
The process is a way to get shareholder approval without calling a formal shareholder meeting; instead, shareholders vote in writing, for example by emailing their ‘yes’ or ‘no’ decision on a proposal, such as changing bylaws.
The result of this action is similar to a regular shareholder vote – if enough people approve a proposal, it is voted through.
“It is apparent to us that the current board has no intent to engage with us,” Edward Smolyansky said in a statement.
“We believe this consent solicitation is the most direct and effective way to return Lifeway to the people who actually own it.
“The company’s circumstances demand bold, unprecedented action. We must end entrenched, self-serving control and bring in leadership that will act in the best interests of all shareholders.”
“We believe that the board has repeatedly disregarded shareholder feedback, failed to articulate a credible strategy, and chosen to reward failure. It’s clear to us that this board cannot be trusted to lead Lifeway forward.”
‘Legally deficient’: Lifeway board hits back
In response, Lifeway’s board said Edward and Ludmila’s statement was ‘legally deficient’ and ‘violates Illinois law and the company’s organizational documents’.
“Their statement purports to set a record date for their proposals, when they don’t have a right to do so, and ignores the requirement that all shareholders entitled to vote receive proper notice of the proposed action prior to the taking of any action by written consent –and they have failed to do so.
“Accordingly, shareholders are urged to disregard the Smolyanskys’ recent filing and any communications from them that violate the law and our charter/bylaws.”
The board added that its strategy had delivered ‘strong shareholder returns and financial results’.
“We look forward to continuing this momentum for the benefit of all shareholders,” the statement concluded.
Family feud goes on
The Smolyanskys have been embroiled in a very public spat for nearly 4 years years over how the company should be run.
Edward and Ludmila have sought to oust Julie as CEO multiple times, most recently in August 2024 when the duo filed a consent statement with the SEC to initiate a change of leadership.
“Under my sister Julie’s authority, Lifeway has been on autopilot for far too long,” Edward said at the time, “missing critical market opportunities due to a lack of strategic vision. It’s time for a fresh approach to leadership that prioritizes growth and innovation over personal agendas.”
Most recently, Edward and Ludmila disagreed with the Lifeway board’s decision to rebuff two attempts from Danone North America – which owns a 23.4% stake in the kefir business – to acquire the company.
“We strongly support Danone’s offer, which represents a substantial premium over Lifeway’s recent share price and reflects their confidence in the growing U.S. kefir market – a category we helped build from the ground up," the two shareholders stated.
Danone is suing Lifeway for issuing shares to CEO Julie Smolyansky without seeking consent.
Insider trading activity has intensified in the last 12 months, with 490,552 shares sold in 44 transaction versus 20 purchases of 197,840 shares, according to the SEC. Ludmila (selling 301,930 at a total value of $6,695,554) and Edward (272,758 = $2,818,602) Smolyansky have been the most active in the period.
Lifeway Foods’s financial performance & NPD
In the five years to December 31, 2024, Lifeway Foods’ net income increased 35.85%; its revenue grew 16.62%; earnings per share rose 38.20%; capital spending increased 50.68%, and cash flow was up 7.91%, according to WSJ.
In FY24, Lifeway’s revenue rose 16.67% YoY to $186.82m but the company’s cost of revenue ($138.25m, 17.47%)and total operating expenses ($172.97m, +20.85%) rose YoY. Meanwhile, its operating profit ($13.85m, -18.49% YoY), net profit ($9.03m, -20.60% YoY) and diluted EPS ($0.60, -20.54%) decreased.
Lifeway recently launched a range of flavored kefir with probiotics and 5g of collagen per serving. Flavors included Matcha Latte, Berry Blast, Tropical Fruit, and Plain.
The company also unveiled probiotic salad dressings at the recent Expo West 2025; introduced new whole-milk kefir varieties, and expanded distribution for several of its top-selling product lines at major retailers nationwide, including Amazon Fresh, Target and Whole Foods Market.
